Exploration Insights by Robert Tyerman

Bulls of Chinese growth might consider West African iron ore play Afferro Mining, which has lifted estimated resources at Nkout in Cameroon 41 per cent to nearly two billion tonnes.

With indicated resources of 944 million tonnes at 32.7 per cent iron and inferred resources of 1.05 billion tonnes at 31.6 per cent iron, the AIM-quoted company has launched a 35,000-metre drilling programme there and expects a scoping study to be ready before the end of this year.

Afferro also has 38.5 per cent of the Putu iron ore project in Liberia, holding an estimated indicated and inferred resource of 3.2 billion tonnes at 34.3 per cent iron, in partnership with Russia’s Severstal steel group on a co-funding basis. The company says it expects a pre-feasibility study on Putu early in the second quarter of next year.

CEO Luis da Silva suggests production costs could come out at $40 a tonne at Putu and $22 a tonne at Nkout, against recent prices of more than $130 a tonne. Afferro is looking at several other prospects in Cameroon, including Ntem, which has ‘promising magnetic targets’.

Having raised £15.5 million at 90p in July, the company had seen its shares, once nearly 180p earlier this year, fall to 44p on concern over future funding and other issues. This seems overdone and, although clearly risk remains, a rally could be on the cards.

Meanwhile, wheeler-dealer Frank Scolaro’s Obtala Resources, out of favour at 32.5p, has come up with some encouraging estimates for its Mokopane project in South Africa, suggesting indicated and inferred resources of 600 million tonnes at grades ranging from 46.3 per cent to 53.1 per cent. The shares have speculative appeal.    

Parkmead at crossroads

Ex-Dana Petroleum boss Tom Cross’s Parkmead Group is buying into the UK North Sea’s Platypus gas field and Possum gas prospect. Cross, who sold Dana to the Korean National Oil Corporation for £1.7 billion last year, is turning AIM-quoted Parkmead, which lost £3.5 million in the year to June, from an investment and advice concern into a new oil and gas company and has lent £8 million to the company, only part of which will be needed to cover its purchase from ExxonMobil of 15 per cent of the North Sea blocks containing Platypus and Possum.

Dana discovered the Platypus field last year, with an estimated potential of up to 180 billion cubic feet of gas, while the adjacent Possum field holds an estimated 100 billion cubic feet of gas. With Parkmead shares languishing at 12.75p, the hope is that Cross is laying the groundwork for a repeat of his Dana success. 

Range scope widens

Range Resources says proven oil reserves in its Trinidad project have risen 490 per cent to 15.4 million barrels. The AIM-quoted company, based in Western Australia and steered by entrepreneurial executive director Peter Landau, plans to double production there to 1,400 barrels a day in the short term, with a target of 4,000 barrels a day in the next two to three years.

According to Range, this reserve increase follows recent engineering studies of secondary recovery potential in the company’s Beach Marcelle Block. With a wide geographical spread, Range is also engaged in projects in Somalia’s Puntland semi-autonomous region, in the former Soviet republic of Georgia and in Texas, where the company reports encouraging developments at its North Chapman Ranch project and elsewhere.

Range shares, which have traded between 23.5p and 5.97p over the past year, now change hands at 9.35p, at which they have speculative recovery potential.